Linked and Loaded Wednesday

In an article on the Brookings Institution website that was originally posted by the National Review, Scott Winship questions the idea that greater inequality at a point in time is associated with less generational mobility over time — what the Chairman of the Council of Economic Advisors, Alan Krueger, called the “Great Gatsby Curve” in a speech given on January 12th.

Winship’s article does a disservice to a well-established literature on generational mobility by suggesting that the basic information Krueger used is in some sense invalid. Krueger’s Great Gatsby Curve is in fact well-rooted in the labour economics literature, and debate would be better placed addressing the policy implications he draws than to suggest that President Obama’s top economist feels compelled to create his own facts.

A businessman would be crazy not to want regulatory policy to be made more favorable to his firm. And the executives of businesses tend to earn pretty high salaries, so naturally they favor lower taxes on the high-salaried. But when it comes to job-creation, it’s all about the marginal benefit of hiring an additional worker and that’s all about sales and demand

Ezra Klein points out that Mitt Romney’s policy agenda is far to the right of GW Bush:

According to the nonpartisan Tax Policy Center, Romney’s plan — which, after extending the Bush tax cuts, lowers the corporate tax rate, eliminates the estate tax and repeals some high-income tax increases from the Affordable Care Act — amounts to a tax cut of $600 billion in 2015. The International Monetary Fund estimates America’s gross domestic product will be $18 trillion that year, so that’s a tax cut of more than 3 percent of GDP.

In contrast, when Bush’s first tax cut was passed, the Joint Committee on Taxation estimated it would cost a shade over 1 percent of GDP. So, by any measure, Romney’s tax cuts are far, far larger.